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Green light: AMPD Ventures (AMPD.C) up 52% on game-changing movie production deal

08/20/2020

After a months long quiet period in which investors had to wait patiently for AMPD Ventures (AMPD.C) pipeline contracts to land, a period that also saw the stock slide all the way back to $0.125 (and my posting an article compelling the company to get a move on), AMPD CEO Anthony Brown blew the gates off today with news the company has landed a contract that may bring it close to profitable.

AMPD Ventures Inc … is pleased to announce that it has signed a letter of engagement with Versatile Media LTD (“Versatile”) that the companies anticipate will lead to a multi-year definitive agreement through which AMPD will provide technology, infrastructure, and services to Versatile in the rapidly burgeoning virtual production sector.

At the time of writing, AMPD stock was up 52%, from $0.125 to $0.19.

Virtual production is the next wave of film and TV production technology where, rather than building expensive sets at exotic locations, employing hundreds of crew members, and spending months adding digital effects in post production, producers can instead use existing video game engines and virtual reality tech to create backgrounds and effects on the fly, as the actors are doing their thing.

This is increasingly a big deal, especially under the restrictive work environments needed under COVID-19.

Versatile is building a big VR/AR film production facility in East Vancouver, with Asian financing. The deal will bring immediate cash to AMPD.

Under the terms of the engagement, it is expected that AMPD will provide the on-premise [virtual production] technology requirements for Versatile’s initial 12,000 sq. ft. studio, as well as provide on-going data centre-based rendering and other hosted infrastructure. The deal is expected to generate revenue for AMPD in the region of $1.6M over the next 36 months.

AMPD will be wiring the facility up, installing servers and software that will allow digital animators and technologists to work on the fly, building worlds as needed at the express request of on-site Directors and Cinematographers.

Virtual production is widely expected to result in a paradigm shift in the way that movies and TV shows are made because it provides creators with a way to see, engage with, and shoot final VFX imagery at the same time as principal photography. With virtual production, cameras, actors, and locations may be completely synthetic but the result, thanks to many recent technological developments, can still largely follow the ‘rules’ of live-action filmmaking.

For more on how this works, this attractive young writer recently, and coincidentally, posted a story about it all.

We’ve talked about AMPD for a long time on Equity.Guru, having been associated with the team that brought it public, but the company did face a longer than expected deal pipeline and, early on, a coordinated short attack, that saw us recommend folks stay away until the dust had settled.

This hasn’t always been a position the company enjoyed, but we weren’t about to lead our readers to a place where they had a decent chance to lose money, even if the company involved was friendly to us.

That position, with this deal, is turned on its head.

Last quarter, AMPD showed a $900k loss, based largely on the setting up of DC1, their pilot high-performance-computing centre, which will play a big part in the Versatile deal. That centre is now up and running, and being used by Rick and Morty animators Bardel Entertainment, as well as Artificial Intelligence companies, so we expect that loss to shrink next quarter.

With $800k annually added to the mix from Versatile, AMPD won’t suddenly turn into a billion dollar powerhouse, but it will be exposed to a long line of high budget movie and TV productions lined up to use that facility, which should be built out by the end of the year.

This. Is. Massive.

Virtual production is a monumental shift in the way movies are made, and while just about every production wants to use it, few facilities are really set up to do it well. Versatile will be one of the first, and the AMPD machines at the beating heart of it all are intended to be able to rend video on the fly, instead of months later, in a way that allows the production to change as needed.

“Can we move that mountain a mile to the right?” Sure.
“Can we make it 4pm and slightly rainy?” Done.
“Can we make Willem Dafoe attractive?” No, technology has limits.

While a lot of virtual production right now involves LED screens showing a computer generated background, Versatile plans to go to the next level and do much of the production in the virtual space, rather than using cameras to capture digital projection. That’s going to vastly reduce production times, costs, and post production expenses.

This is also, from what I’ve heard, the first of several facilities Versatile has planned. If the AMPD team-up stays fruitful, it’ll be great for both parties.

I’ve given AMPD a fair amount of crap for their quiet time. That’s how I roll. If things take longer than promised, I want to be the one talking about it, not making excuses for it.

But this deal is epic. It has taken some time to win against some serious competitors, and it’s a great sign that there’s more to come.

I am back to buying AMPD stock, and its current $5m market cap makes it, in my opinion, a value buy.

— Chris Parry

FULL DISCLOSURE: AMPD is not a current Equity.Guru marketing client but the author and this website own stock, and will likely purchase more.

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